HUD’s Green and Resilient Retrofit Program
By Abram Mamet
7 min read
An Introduction to the New Initiative
The U.S. Department of Housing and Urban Development (HUD) recently opened applications for its new Green and Resilient Retrofit Program (GRRP), a multi-billion-dollar initiative meant for deep green improvements to certain HUD contract properties.
Proposed initially as part of the Build Back Better Act, the GRRP was the only housing concept that survived Congress’s retooling of that original bill into the Inflation Reduction Act (IRA). “I think the major contributions of this program to making housing part of the solution to the climate crisis was probably a good part of why it was included [in the IRA],” says Ethan Handelman, HUD’s deputy assistant secretary for the Office of Multifamily Housing, and whose office is responsible for program administration.
There are three funding cohorts available to building owners and developers through the GRRP. The first, Elements, is for ongoing recapitalization transactions that would benefit from additional green components. The second, Leading Edge, is meant to fund ambitious green rehabilitations and retrofits at properties in efforts to achieve specific green building certifications. The final cohort, Comprehensive, is aimed at both rehab projects and new development and will provide funding for deep utility efficiency, renewable energy generation, carbon emissions reductions and climate resilience retrofits.
All three cohorts are meant to have a deep and lasting impact, with HUD designating up to $40k, $60k and $80k/unit for Elements, Leading Edge and Comprehensive, respectively. “The kind of money HUD expects to spend per unit indicates the scope of work they want to see is well beyond just HVAC, hot water, LED lighting, low-flow devices, window and insulation upgrades,” says Ravi Malhotra, the founder and president of International Center for Appropriate and Sustainable Technology (ICAST).
Though there are obvious benefits through the program to both property owners and HUD, Handelman emphasizes the real impact that the GRRP will have on residents as well. “We made real efforts to make sure that when renovations are happening, there’s clear communication with residents and that they have some ability to participate in planning for the scope of renovations,” Handelman says. “We want to make sure that this program gets implemented with equity in mind.”
Using Lessons From the Past for a Greener, More Resilient Future
The GRRP uses many lessons and data points from a previous HUD program—the Green Retrofit Program (GRP)—to update and modernize federal efforts to combat and respond to climate change. Critically, the GRRP intentionally combines energy efficiency and climate resiliency in one holistic funding source, with a constant focus on improving resident health and well-being. “The combination is pretty powerful,” says Handelman. “What we’re seeing, especially with the comprehensive retrofits, is it provides a long-term sustainability for the property as well, which contributes to preservation.”
“This is the first federal program that really combines resiliency and energy efficiency in one,” says Rob Hazelton, CEO of Dominion Due Diligence Group (D3G).
Handelman says that HUD also used lessons from the GRP and other federal programs to help streamline the application process. “This is designed to be the easiest application I have ever seen. We don’t ask a lot up front.” Handelman points out that although most tax credit-related applications require the developer to provide a comprehensive overview of the project, the GRRP is meant to be as simple as possible, with applicants needing only to demonstrate their needs on both the energy efficiency and resiliency sides using already published materials. “It’s really designed to make sure the subsidy goes as far as possible and that properties get the help they need.”
The biggest challenge in the application, it seems, is ensuring that an owner’s property is in fact eligible for the GRRP. Essentially all HUD Project-Based Rental Assistance (PBRA) contract properties, not just 202, 236 and 811, are eligible. However, Congress did not make HUD’s other major subsidy program, Project-Based Voucher Assistance (PBV) properties eligible. This eligibility guideline is the same as it was under the GRP, and is critical for applicants to understand, says Hazelton. He also says that 13 years ago, with the GRP, 54 percent of applicants were not even eligible for the program, and eight percent had insufficient information provided. “It goes through all the eligibility aspects of it within the Notice of Funding Opportunity (NOFO), but if respondents to the NOFOs do not review and look at what the qualified properties are, that’s a folly.”
However, that limited scope is by design, says Hazelton, as HUD naturally has more control over the PBRA program than it does over PBVA. “For PBRA properties, HUD administers their entire contract. Under PBVA, the contracts are typically administered by a separate contract administrator, like a Housing Authority or another local entity.” Thus, working with only those specific PBRA contracts allows HUD greater insight into data points that will benefit all properties that HUD interfaces with.
“The GRP,” explains Hazelton, “produced so many data points that are now common elements of HUD programs. As for the GRRP, we should have data points and outcomes from it that are going to prove useful for at least the next ten years – and that’s for all types of housing, not just a PBRA property.”
Indeed, says Handelman, just like with the GRP, HUD wants “to make sure that we show what can be done effectively with this, and ideally set the stage for more activity, whether it’s with other funding sources or additional resources from Congress to do more of this. We want [the GRRP] to show what’s possible.”
New Systems for Enhanced Efficacy
Though there is a tight scope for eligible properties, a wide range of independent contractors can work with both the Technical Assistance Provider and Benchmarking components of the program. Both components, which will help ease the success of the GRRP, are updated and modernized from past HUD iterations.
On the Benchmarking side, explains Malhotra, that due to the variability of utility consumption data across properties, “HUD created a tool specifically for the GRRP, called Multifamily Building Efficiency Screen Tool, or MBEST, to screen multifamily buildings based on existing systems and building features that impact energy use. It’s brand new, so ICAST engineers are still looking into it. But we are thrilled that HUD recognized that Benchmarking is not possible for all properties and will allow MBEST as the preferred tool for the Leading Edge and the Comprehensive programs.”
On the Technical Assistance Provider side, HUD is also implementing a new designation, called the Multifamily Assessment Contractor (MAC). “Their role is to help with that due diligence and help guide the scope of the comprehensive retrofits,” says Handelman. The MACs are, by design, supposed to be flexible and work with properties wherever they are in the green design and implementation process. “If it’s an owner who’s just getting started and knows they want to make some improvements, but isn’t really sure which ones to do, those MACs can come in and help identify which steps and due diligence are needed and guide the scope of work to make sure the subsidy stretches as far as it can and does what the property needs. And if it’s an owner who has done a bunch of assessments and has a great handle on the property, you can say, ‘yep, here, I’ve got a bunch of reports, use these,’ the MACs can check and make sure that those are what we need, and you’re off to the races.”
Applications are now open, and Handelman says that it is important that applicants know that HUD is using a rolling deadline and funding dates. “Just put the application in, and periodically, throughout the coming year we’ll be drawing from the pool for each of the cohorts, ranking those, and making awards. And if for some reason, an application doesn’t get selected, at that point, it stays in the pool.”
Though it is still relatively young, Hazelton says that there is much industry enthusiasm for the GRRP and its many innovations. “It’s quite exciting to see how they built this thing, for distribution of capital across the country, different climate zones, different geographic areas, always focusing on needy communities and disadvantaged neighborhoods. It’s a great program and I’m excited to see how it pans out.”
